Game of numbers: RTA loan would cost $150,000 per year

What would it cost the city of Pueblo to loan the Pueblo Urban Renewal Authority $14.5 million to build an exhibition hall onto the Pueblo Convention Center?

Rough estimates would put the price at a minimum of about $150,000 a year that could be spent on capital development projects.

During debate on the question last Monday, Councilwoman Ami Nawrocki made a point of saying that while PURA would get the loan interest-free, it could cost the city $300,000 or more each year in capital investment funds.

If the numbers debate seems imprecise, it’s because the city takes the $7 million it collects in half-cent sales tax revenue each year and pools it with other cash funds, such as waste water fees and unspent cash reserves.

That cash is invested in a range of short-term and mid-term accounts. The interest money from the half-cent fund can then be used on capital development projects, such as roads or City Hall refurbishing.

So if council loaned PURA $14.5 million from its $40 million half-cent fund, how much would that reduce the city’s capital development budget each year?

City Manager Sam Azad said he couldn’t put a precise number to the cost, but that city finance officials gave Nawrocki a projection based on the interest that would be lost if the city invested the $14.5 million in traditional tools, such as U.S. Treasury bonds.

That interest money ranged from $248,000 for a five-year treasury note to $600,000 if the money were in a 15-year note.

Azad said the actual year-to-year interest is less predictable because the city keeps those combined revenues in a mixture of interest-bearing accounts and funds.

Many are short-term so the money can be obtained quickly if the Pueblo Economic Development Corp. recruits an employer that needs quick financial assistance.

But looking at the half-cent fund alone since 1992, the tax has generated $9.4 million in interest, according to city accounts.

That revenue, divided by the 22 years covered, can be crudely chopped into $428,000 a year in interest. If you took $14.5 million out of the $40 million in half-cent revenue, proportionally it would represent about $155,000 in interest.